Management Books

Management InBrief Issue 6 OUT TODAY

Fortnightly News Magazine for Busy Managers, Directors & Entrepreneurs. Issue 6 published today. Get it now at www.managementinbrief.com

Fortnightly News Magazine for Busy Managers, Directors & Entrepreneurs.

Issue 5 published today. Get it now at  www.managementinbrief.com

Fortnightly News Magazine for Busy Managers, Directors & Entrepreneurs.

Issue 4 published today

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Phil Turtle will be one of three expert speakers covering the problems of protecting brand image in the social media environment

Webinar: – Protecting your brand image in the Web 2.0 jungle

Web 2.0 services, including wikis, social networking portals and blogs, are powerful drivers in the B2B and B2C communications channel – for many companies, they open up new doors as never before.

But these same Web 2.0 services also create more than a few branding and security headaches. not least in reputational terms.

It only takes one slip to trigger a viral crusade against your organisation that can significantly dent your company’s reputation.

Many companies – mindful of this issue – have forbidden the use of social networking and other Web 2.0 services by their employees, but doing so means they miss out on the plentiful benefits that such services bring to the business table.

Join us for an entertaining and thought-provoking webinar in which a team of senior professionals look at the brand image and reputation issues that Web 2.0 services engender, and explain some of the solutions that are now available.

This webinar will:

• Help you understand the viral power that drives Web 2.0 services.
• Explain some of the problems these services create.
• Detail the solutions to the reputational issues caused.
• Educate you to take a fresh look at reputational security controls.
  

This webinar is for:  

• IT managers who are forward-thinking in their approach to Web 2.0 control issues
• Managers wanting to better understand the solutions to reputational threats from Web 2.0 services
• Anyone wanting to gain an edge in Web 2.0 control issues
  

Click Here to Register for the Webinar Now

By Phil Turtle 

The longer a debt remains unpaid, the greater the chance that it will never be paid. In fact the majority of debts that go past 90 days become bad debts. So says Philip Turtle MBA of marketing and management consultants Turtle Consulting Group. In the next of his well-regarded series of business advice, Phil brings you the know how on making bad debts a thing of the past.

 Every business should ensure that they have a debt recovery plan. This usually involves scheduling in a series of letters, then phone calls and eventually taking legal action or handing an outstanding debt over to a recovery agency. However this step should be seen as a last resort as a debt collection agency typically charges 10/15% percent of the debt as their fee. But then again 85/90% is far better than zero – and these agencies mostly operate on a no recovery, no fee basis.

1) Customer satisfaction phone call – before dispatching invoice

An unhappy customer is more likely to become a late payer or bad debtor. So before dispatching your invoice, think about calling the customer to enquire if they were happy with the service they received. Then forewarn them that the invoice is on its way and reinforce the payment terms eg. 30 days. For regular customers, you don’t need to call after every order, but an occasional call will let them know that you are thinking about them and their needs.

 If you think an item may get queried, then phone and explain what the charge is going to be and get your customer’s agreement to you billing that amount. Confirm the conversation in an e-mail or letter.

Another valuable tip is to split items onto different invoices. If all your charges are on one bill then the whole amount is going to get held up over one small query, seriously hurting your cashflow. On the other hand if the queried item is on a separate bill, only that much smaller amount will be delayed.

2) First overdue letter – 7 days after due date

At this stage, sending a friendly reminder that the due date has passed is the best thing that you can do. If an invoice is less than a fortnight overdue, you must give the customer the benefit of the doubt that the cheque is in the post or that they simply forgot. You should send out a duplicate invoice with your reminder letter, with the past due date clearly highlighted. This then avoids the frequently used and abused ‘Oh but I’ve lost the invoice’, excuse.

3) Second overdue letter –7 days after the first letter (2 weeks after due date)

Again, this is more of a nudge than a demand. Keep the tone similar to your first letter, but point out that this is now the second time that you have written. Again, enclose a duplicate invoice. It might also help to nudge the tardy customer’s attention towards the Late Payment of Commercial Debts (Interest) Act (see below).

4) First collection phone call – 7 days after second letter (3 weeks after due date)

The invoice is now one month overdue and it is time to pick up the phone and speak directly to the customer. Be prepared for a barrage of excuses like ‘the cheque’s in the post’ and ‘we’re just waiting for a big customer to pay and then we’ll pay you next’.  Be courteous and let the customer speak, but don’t end the phone call without getting a firm commitment as to when the debt will be settled.

5) First collection letter – on the day you make the first call (3 weeks after due date)

On the same day that you make the collection call, post out a letter first class which reiterates the payment date which has just been agreed.

 6) Second collection phone call – 7 days after the first collection letter ( one month after due date)

If you have still had no response, it is time to make a second phone call. The account is now a month overdue and the longer a debt remains unpaid, the more likely it is never to be settled. Be polite, yet increasingly firm and ask for immediate payment. If the debtor insists that they cannot pay right away, make another commitment to a payment date.

7) Second collection letter – 7 days after new payment date has passed (40 days + after initial due date)

At this point, you need a change in the tone of your communication. The customer must now be made aware of the seriousness of the situation – and immediate payment demanded. Put the customer on ‘stop’ and warn the customer that further credit will not be available unless the matter is resolved within the next seven days. Send this letter, and all future communication via recorded delivery. This will let you know for sure that the customer has received your letter – and will communicate to them the increasing severity of the situation.

 8) Third collection phone call – two weeks after second collection letter (54 days + after initial due date)

You are now telephoning the customer to let them know that this is their final chance to settle their debt. Warn them that the debt is about to be passed over a collection agency, which will not just incur them further costs, but could also potentially put them on a credit blacklist. Get the customer to promise to pay within 7 days to stop this procedure.

9) Hand over to collection agency – two weeks after final letter (68 days + after initial due date)

The account is now three months overdue and requires professional help. A debt of three months standing is statistically difficult to recover…….

10) Devise your own system

The outline procedure I’ve shown here may or may not be ideal for your business. Use it as an outline to devise your own system with more or less steps and longer or shorter time intervals.

Above all once you’ve decided on a debt collection procedure make it totally automatic process that is religiously adhered to. 

One of the big problems that UK businesses have is that they invoice late and then don’t chase the cash in aggressively. It’s not something we feel comfortable with. And it’s been the death of thousands of businesses – so be more aggressive and make sure you stay on top of your cashflow.

By Phil Turtle, Managing Director of Turtle Consulting Group

What separates a weak business plan from a great one? And why is a killer business plan such a vital tool for a successful company? Business owners write plans for three different reasons. Firstly, a plan is vital when looking for a bank loan, to either start or grow a business or when looking for Venture Capital funding. But a dynamic business plan is even more important for the day-to-day running of a business and will be key to keeping your business on track to success.

There are eight different aspects of your business that you need to consider when going in for the kill.

 1. PRODUCT/SERVICE

First of all, you need to clearly describe the unique benefits and differentiators of your product or service. Who are the target customers? What value propositions does the product/ service provide to the customers? What is the revenue model? Not knowing how to bring in money was a key flaw of many of the early 90s dotcom companies. Also be sure to spell out whether the business model has been proven elsewhere. If you can demonstrate that you have well thought out answers to all of these questions, you have completed the first stage of writing a killer business plan.

 2. MANAGEMENT TEAM

Even more vital to your business are the people who make it happen. Be sure to spell out who are the founders and what is their experience, qualifications, and very importantly their past achievements. Think about how critical the idea-orginator is to the future success of the business and how he/she will be retained. Clarify how are the management responsibilities are shared amongst the team. Now, project yourself and your business into the future and think about your plans for reinforcing the management team down the line. What additional sets of skills and experiences are you seeking to bring into your business? Don’t be shy, acknowledged gaps make you look more credible if you have a strategy to address them.

 3. MARKET AND COMPETITION

The next step is to consider your business in the marketplace. What is the potential market size for the product/service? What is the expected market growth and which major factors influence that growth? Demonstrating an awareness of the market as a whole, think about your competitors and what they offer? What are the strengths and weaknesses of competitors? How will they react? And of your own business. How do you compare on key attributes including relationships with suppliers and customers and technological capability?

 4. MARKETING AND SALES

Now you have defined your business’ standing in its marketplace, you need to plan for what you are going to do to improve it. What are your specific plans to promote the product/service? How will the product/service be distributed?  Which partners will be needed in the distribution channel? What will be the pricing strategy? Are you going to bring in outside help such as a marketing agency to reinforce your position? How will you establish a sales pipeline?

 5. BUSINESS SYSTEM AND ORGANISATION

To recap, we have looked at defining your product or service, detailing the management team, gaining an understanding of the marketplace and thinking about improving your market position. Now to move to operations. What is the organisational structure of the company? And importantly, how will this organisational structure help achieve business goals?

What additional skills will be required in the future and what is your recruitment strategy? What is the scope of the business? Will all functions be implemented in-house? Or will non-core operations be outsourced? If this is the case, have strategic partnerships been identified? How will these partners be secured? Have key vendors been identified?  If yes, how will these vendors be secured?  If no, what is the plan to get vendors?

 6. IMPLEMENTATION SCHEDULE

Ok, so that’s the day-to-day running of the business explained. But what about mid-term planning? What is the detailed short-term implementation plan? Draw up a chart detailing a schedule of month-by-month activities. Make sure you are clear about who is responsible for each of the tasks. What are major milestones? What are the interdependencies between tasks? What is the outline five-year implementation plan? Sneaking a glance further ahead, what are possible long-term options for the business?

 7. FINANCIAL PLANNING

Now it’s the numbers bit. You need to look at your financial projections for the next three to five years. Consider income, cash flow, company valuation, utilising discounted cash flow analysis, revenue multiples, balance sheet. What are the key assumption used in the financial pro-forma? What are the financial requirements for the business and what sources of financing have been identified?

 8. OPPORTUNITIES AND RISKS

Finally, this is the part of your plan where you spell out the best-case and worst-case scenarios for your three/five-year financial projections. As an example, assume you are planning to take a 10 percent share of the market. But you make more – or less. What would you do if you only took five percent? Are you able to shed overheads? Or stage investments? What if you do better than expected and grab 15 percent of the market? Have you got the resources to meet the demand? Would you put up prices to control the volume? Are you in a position to recruit quickly if necessary? Conduct a sensitivity analysis, which is where you enter your best – and worst-case scenarios into your financial spreadsheet and see what knock-on effect they have – particularly on cash-flow!.

Good relationships with your distributors and major suppliers can bring both profit and peace of mind to you and them.  Strategic long term expectations will reap benefits including preferential pricing and credit and delivery terms.  But this kind of lasting partnership doesn’t come easily.  It needs to be worked on over time. 

Like all strong relationships, the customer-supplier connection needs to be based on a certain amount of give and take and a large degree of trust and respect.  You will be surprised how much good supplier relationships can bring to your business.  The following guidelines can help to steer you and your business through the process.

Price is not everything

It may be tempting, particularly in the early days of a business, to go with the supplier that can offer you the lowest price.  But sustainable relationships are built on more than just price.  It is worthwhile to ask yourself how a potential supplier is able to undercut its competitors.  Could it be at the expense of technical advice, product range or the ability to source ‘specials’?

 When assessing future suppliers, make sure you take into account the full range of factors that affect the quality of your relationship.  In addition to price, these could include;

1. How do they ship their products to site and how much extra does that cost – especially if from a distant national distribution centre. A good price may not be so competitive once shipping has been added.
2. What are their standard invoicing terms?  Do they offer discounts or other incentives for fast payment, bulk orders, etc?
3. How quickly can I expect my order?  What happens if I occasionally need an order in extra quick time?  Will they pull out the stops for me?  Do they have the mechanism for express delivery?
4. How will they manage my account?  Will I have a dedicated account manager with a direct dial number?  Or will I have to deal with faceless people in call centres?
5. Can I return excess product?  How do they handle returns and other problems?
6. Are they willing to customise orders or handle other special needs?
7. What level of technical advice is offered?  And is this advice available throughout the working day?
8. What is the policy on replacements and repairs?
9. How good is the support in choosing the right product for my needs?
10. What is the product/service quality?  And is it of a consistent level?

Check finances

It is common practice for suppliers to investigate the financial status of potential new customers, but as the customer, all too often we don’t exercise the same caution in return. 

By getting a credit report on a supplier, you will have a clearer picture of its potential as a long-term strategic partner.  A supplier with credit problems may be unable to offer credit themselves or may find it difficult to ship orders on time.  To obtain credit reports contact Dun & Bradstreet www.dandb.com or Experian www.experian.co.uk.

Ask for references

Any supplier worth their salt will be only too happy to provide you with references from current customers.  Don’t be afraid to ask about the bad times.  How effectively a supplier deals with problems can be a very good indicator of whether you want to work with them.

Maintain good faith

Your ability to foster long-term good-will and partnership with a supplier depends not just on the service you receive from them, but also on the way you handle them.  Paying your bills on time is a good start and will get you preferential treatment to less reliable customers.  Avoid quibbling over every price. 

Your suppliers also need to make a profit and if you screw them down to their absolute minimum every time they will start to see you as a less favourable customer.  Despite what you may have been taught, a good contract is one where both parties feel they are the winner.  And think about it, if your supplier isn’t making a profit soon you won’t have that supplier.

Don’t cry wolf

If you tell your supplier that every order is urgent, they will not take it so seriously the one time when extra speedy delivery really is a must.  If an order is just routine, then say so.  And agree a reasonable delivery date.  Then when you need to impress an important customer of your own, your supplier will be more likely to help.

Eggs in baskets

Depending on how important the goods or service is to your business, develop good quality strategic relationships with two or three providers.  Share the work out evenly between them and let them know the arrangement.  This gives you security of supply if one fails or has problems and also gives you a mechanism to keep a check on prices and service levels.

Before you embark on that costly and time consuming new business drive, take a step back and look a bit closer to home: consider first whether you are selling successfully to your existing customers.

Many businesses may be overlooking significant sales opportunities on their doorsteps by simply neglecting to market to their customer base.

Most of your customers don’t know about half of the products or services that you offer- and they are only really familiar with what they are already buying from you. And could they be buying more of what they are already buying?

You’ve got them-now make sure you keep them. It costs far less to retain a client than find a new one.

Looking for new business is never economical: you must tell 1000s about your offering, for 100s to listen to your sales message, 10s to like it and just 1 to buy. You know exactly who your customers are, and where they are – it’s 1,000 times less difficult.

 Keep your prospects informed and your clients even more clued-up. 

(1) You’ve already got your foot in door
In fact it’s more like your entire leg. If they are already buying from you, they must be convinced you are doing something right. They’re pleased with the current product or service you are supplying them, so offer them something different as well. They are certainly more likely to buy from you than a competitor who is still untested.

(2) Buyers change
OK, you think you’ve maximised the potential for selling to all your major customers and you’re on pretty friendly terms with them. But what if a key contact leaves and suddenly you are faced with a stranger who has their own loyalties to another company? You no longer automatically hold favourite supplier status and better start talking up your offering PDQ.

(3) The wandering eye
Even if key personnel within your customer base remain the same, they are not impervious to the promotional attempts of your competitors. Every customer has a wandering eye. And if your competitors are putting themselves about, you’d better make sure your efforts at least match up to theirs. Don’t let a rival snatch an important customer from under your nose.

(4) Remind them how clever they were for choosing you in the first place
Anything that makes your customer feel good about buying from you takes you one step closer to securing a customer for life and increases your perceived value. Make sure you know who else does business with you, major new business wins and corporate successes. It reconfirms they’re doing business with the best.

Read more about Customer Care and retention: http://www.managementbooks.co.uk/catalogue/customer-care-customer-care-general

MARKETING AND BRAND MANAGEMENT

What others think of your company can make or break it. Marketing consultant Phil Turtle, MD of Turtle Consulting Group looks at the wild animal called reputation.

The reputation of a business is a highly intangible but critically influential factor in a company’s ability to achieve sustainable competitive advantage in its markets.

Part of understanding the importance of reputation to a business lies in the recognition and value of its stakeholders, government bodies or industry associations. However, what is generally less well understood – especially with smaller companies – is how to manage and mould the firm’s external reputation.

WHY IT MATTERS
Before we look at what reputation is and how to manage it, let’s ask a key question: “Does reputation matter?” The short answer is yes – have you seen a Ratners Jewellery store since Gerald Ratner told a Confederation of British Industry meeting that his company’s products were “total crap”? Of course you haven’t, because his “joke” wiped £500 million off the group’s value almost overnight.

Likewise, when Enron and Worldcom were shown to have lied and cheated in their accounting, their reputation with the stock market, their customers and their staff dived. And so too did the companies – into total oblivion.

So reputation is important to major corporations, but is it also important to smaller companies? Yes, because it is your reputation that gets your sales people through the door and winning business; it is your reputation for quality service, quality products and timely delivery that gets you repeat business; and it is your reputation for going the extra mile that gets recommendations from your customers. And it’s your reputation as an employer that gets you the best (or worst) staff that in turn affects the reputation they give you when dealing with the outside world.

HOW TO DEFINE IT
Reputation can’t easily be defined and probably never will be – largely because it is a dynamic aspect with different things mattering to different people at different times. Research by MORI’s Reputation Centre demonstrates this with quality of product and service declining in relative importance and honesty rising to a much higher level.

Rather than trying to define reputation in terms of factors, 3i’s Director of Media Relations Ingrid Tighe has probably one of the best working definitions: “Reputation is what people say about you when you’re not there,” she says.

Reputation is intangible and complex but, above all, it is actually emotional and is often a very deeply-held view. Reputation is what people think. What they think about you depends not only on what you are, but how much they know about you, in what context they know you and how all of this fits into their personal set of values. We each know that our personal reputation is important to us – it is the currency that allows us to operate freely in the world. The same is true of organisations. A company that has a “good name” generally succeeds where lesser ones might fail. Companies with good reputations generally ride out storms and crises far better than those with lesser reputations.

So, what sorts out the companies with good reputations from those with next to no reputation – and those with bad reputations? Stewart Lewis and his colleagues at the MORI Reputation Centre believe a company’s reputation depends on a number of interconnecting factors and on how well the firm communicates its values, capabilities and successes to those audiences.

Your company’s performance in each of these areas can affect your reputation in the minds of these people. Actual reputation is not necessarily what your company is or does in these areas – it is what those people think your company is or does.

STAKEHOLDERS WHO CARE
Every company has a number of different “publics” that matter to it – to greater or lesser degrees. As business managers we often confine our thinking to only one public – our customers. But there are many other publics and they do matter. These people are called stakeholders and can include employees, suppliers, investors, the bank manager, competitors, the media, politicians, non-governmental organisations. Often most of these are ignored or, at best, are seen as peripheral.

Lewis told a recent London conference on healthy reputations: “A stakeholder is anyone who can bugger up your business”.

So can your employees bugger up your business? Sure they can. Your suppliers, yes. Your bank manager, too easily. Your investors, of course. It seems all of these groups – most of whom we don’t pro-actively manage our reputations with – have a massive importance in the success of our businesses. They make better friends than enemies, so you need to manage your reputation with them.

Each group of stakeholders has different interests and judges you against different values and terms of reference, but most groups have a core set of common beliefs and expectations – which makes the process of building and managing your reputation possible.

TAMING THE TIGER
If you’re a high growth company then, both corporately and individually, you’ve probably got your head down concentrating on growing and keeping your customers happy – probably blissfully unaware that there’s a loose tiger out there that needs taming, before

it has chance to bite you. “Very often the reputation of a high growth company is actually the reputation of the founder entrepreneur himself,” says 3i’s Tighe.

“Quite often he feels he’s quite capable of driving his own reputation, but unless some of that reputation is transferred to the business and ‘institutionalised’ then it is only him and not the company that has high standing with customers, suppliers, banks and investors. This can make the company very vulnerable should he leave or fall ill – or indeed if anything in his personal life affects his reputation.

“With a portfolio of 1,700 investment portfolio firms there is rarely anything in business that our people haven’t seen many times before and so can bring their expertise to help and guide the board. Often our investment directors notice that reputation management is not on the board’s agenda, and add value by making the firm aware of the benefit of reputation management (and, indeed, the dangers of not doing so).”

MANAGING REPUTATION
Let’s look at the basic elements of reputation management:

1. Draw up a reputation score card. In its simplest form just list your stakeholders and the reputation issues that managers and staff think are important to each. Put them into a matrix and colour where you think your reputation is strong, weak or variable. Immediately, you have a visual tool by which to focus your reputation management efforts and communications.
2. The ideal next step would be to get some external validation. Consider commissioning some simple research to find out what issues stakeholder groups believe to be important and where you really fit on those scales. Think seriously about engaging a reputation management PR agency to help you with this – they can add significant value.
3. Identify differences between perceptions (what stakeholders think) and what you know to be the truth. These are areas where you need to concentrate on communicating your true position.
4. If there are areas where your reputation is below par, look at what lies behind that. For example, if your stakeholders think that your reputation as an employer is poor, then you probably are a poor employer. No amount of PR can fix this element of your reputation until you’ve fixed the problem.
5. Consider how you communicate your messages to stakeholders. Remember that if you don’t tell them, no one else will. Techniques vary from a regular letter or phone call from someone senior in the organisation to news in the media, regular newsletters by post or email and advertising. Never assume stakeholders already know something if you’ve only told them once.
6. Include your staff in the reputation management process. Listen to their views. Not only do they often know what’s wrong but, if they know what’s wrong and you’re not fixing it, they’ll be telling your suppliers, customers and others.
7. Build “care for the company reputation” into the company culture. Insert one simple question into the business decision making process: “How does it affect our reputation if it goes wrong?”
8. Build a crisis management plan by thinking of the things that could go wrong and devising a plan to manage it. Best practice is to react to any crisis immediately and openly. The CEO needs to be seen to be involved in solving the crisis – heads in the sand do not save reputations, honesty and action do.
9. Don’t think of this as a one-off exercise. Make sure the board reviews corporate reputation at least quarterly. And finally, a last word from Tighe: “It takes many years to establish a reputation and only minutes to ruin it. Look after it with great care.”

See more of Phil Turtle’s ramblings at www.turtleconsulting.com/blog (and of course the work his PR consultancy does in creating and maintaining bsuinesses reputations!)